Rewarding Your Team Amid Rising Employer Costs
With increases to National Insurance contributions for employers just around the corner, businesses are facing higher costs of employment. The rate for employers’ National Insurance (NIC) will increase from 13.8% to 15% from April 2025. The threshold at which employers start paying NICs will also decrease from £9,100 to £5,000 per year.
At the same time, retaining and motivating your team remains crucial – especially when considering the significant expense of recruitment.
Here we look at how businesses can explore alternative ways to reward employees that are both meaningful and cost-effective.
Salary Sacrifice Schemes
One financial incentive that can benefit both employers and employees is salary sacrifice. By allowing employees to exchange part of their salary for non-cash benefits such as additional pension contributions, cycle-to-work schemes, or childcare vouchers, businesses can reduce their National Insurance liabilities while employees benefit from tax savings.
Extra Time Off
Offering additional leave days – whether for birthdays, wellness days, or simply as a reward for hard work – can be a powerful incentive. This helps employees maintain a healthy work-life balance without adding to business cost.
Flexible Working Arrangements
Allowing employees greater flexibility in their working hours or offering remote work options can be a highly valued benefit. Flexibility can lead to increased productivity, reduced commuting costs, and improved work-life balance without incurring direct financial costs for the business.
Recognition and Career Development
A simple yet effective way to reward employees is through recognition. Publicly acknowledging hard work, whether through employee awards, team shout-outs, or internal newsletters, can boost morale. Additionally, career development opportunities such as training, mentorship programmes, or opportunities for skill enhancement – demonstrates a commitment to employee growth without increased salary costs.
Profit-Sharing or Performance-Based Rewards
Outside of salary increases, businesses can consider performance-based incentives, such as profit-sharing schemes or bonuses linked to success. This approach ties compensation to results, ensuring that rewards align with business performance.
Workplace Perks
Small workplace perks can go a long way to improving employee satisfaction. Simple initiatives like providing free tea and coffee, subsidising gym memberships, or implementing an employee discount programme can enhance the overall workplace experience without significant expenditure.
In an environment where employer costs are rising, businesses must find creative ways to compensate employees beyond just salary increases. Implementing thoughtful, non-monetary incentives can improve employee satisfaction, enhance retention, and ultimately contribute to long-term business success.
By taking a holistic view of workforce compensation, businesses can foster a loyal and motivated team while navigating financial challenges effectively.
Leave a Reply